UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address, including zip code, of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: |
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated Filer |
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Non-Accelerated Filer |
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Smaller Reporting Company |
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Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
On April 29, 2022, the registrant had
HUB GROUP, INC.
INDEX
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Page |
PART I. Financial Information:
Item1. Financial Statements |
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Consolidated Balance Sheets – March 31, 2022 (unaudited) and December 31, 2021 |
3 |
4 |
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5 |
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Unaudited Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and 2021 |
6 |
7 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
18 |
18 |
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18 |
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18 |
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18 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
18 |
19 |
2
HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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March 31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
(unaudited) |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable trade, net |
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Other receivables |
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Prepaid taxes |
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Prepaid expenses and other current assets |
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TOTAL CURRENT ASSETS |
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Restricted investments |
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Property and equipment, net |
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Right-of-use assets - operating leases |
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Right-of-use assets - financing leases |
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Other intangibles, net |
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Goodwill, net |
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Other assets |
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TOTAL ASSETS |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable trade |
$ |
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$ |
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Accounts payable other |
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Accrued payroll |
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Accrued other |
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Lease liability - operating leases |
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Lease liability - financing leases |
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Current portion of long term debt |
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TOTAL CURRENT LIABILITIES |
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Long term debt |
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Non-current liabilities |
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Lease liability - operating leases |
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Lease liability - financing leases |
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Deferred taxes |
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STOCKHOLDERS' EQUITY: |
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Preferred stock: $ |
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Common stock |
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Class A: $ |
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Class B: $ |
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Additional paid-in capital |
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Purchase price in excess of predecessor basis, net of tax benefit of $ |
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( |
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( |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Treasury stock; at cost, |
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( |
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( |
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TOTAL STOCKHOLDERS' EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
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$ |
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See notes to unaudited consolidated financial statements.
3
HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Revenue |
$ |
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$ |
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Transportation costs |
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Gross margin |
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Costs and expenses: |
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Salaries and benefits |
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General and administrative |
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Depreciation and amortization |
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Total costs and expenses |
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Operating income |
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Other income (expense): |
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Interest expense |
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( |
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( |
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Other income (expense), net |
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( |
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Total other expense, net |
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( |
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( |
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Income before provision for income taxes |
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Provision for income taxes |
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Net income |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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( |
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Total comprehensive income |
$ |
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$ |
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Basic earnings per common share |
$ |
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$ |
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Diluted earnings per common share |
$ |
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$ |
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Basic weighted average number of shares outstanding |
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Diluted weighted average number of shares outstanding |
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See notes to unaudited consolidated financial statements.
4
HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts)
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Purchase Price |
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Class A & B |
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of Excess of |
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Accumulated |
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Common Stock |
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Additional |
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Predecessor |
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Other |
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Treasury |
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Shares |
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Paid-in |
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Basis, Net |
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Retained |
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Comprehensive |
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Stock |
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Issued |
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Amount |
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Capital |
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of Tax |
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Earnings |
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Income |
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Shares |
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Amount |
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Total |
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Balance December 31, 2020 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
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Stock withheld for payments of withholding taxes |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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( |
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Issuance of restricted stock awards, net of forfeitures |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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- |
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Share-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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- |
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( |
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- |
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- |
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( |
) |
Balance March 31, 2021 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
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Balance December 31, 2021 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
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Stock withheld for payments of withholding taxes |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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( |
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Issuance of restricted stock awards, net of forfeitures |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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- |
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Share-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Balance March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
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See notes to unaudited consolidated financial statements.
5
HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net Income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Deferred taxes |
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Compensation expense related to share-based compensation plans |
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Gain on sale of assets |
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( |
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( |
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Changes in operating assets and liabilities, net of acquisition: |
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Restricted investments |
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Accounts receivable, net |
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( |
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Prepaid taxes |
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Prepaid expenses and other current assets |
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Other assets |
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( |
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( |
) |
Accounts payable |
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Accrued expenses |
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Non-current liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Proceeds from sale of equipment |
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Purchases of property and equipment |
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( |
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( |
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Net cash (used in) provided by investing activities |
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( |
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Cash flows from financing activities: |
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Repayments of long-term debt |
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( |
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( |
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Stock withheld for payments of withholding taxes |
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( |
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( |
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Finance lease payments |
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( |
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( |
) |
Proceeds from issuance of debt |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents beginning of the period |
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Cash and cash equivalents end of the period |
$ |
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$ |
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Supplemental disclosures of cash paid for: |
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Interest |
$ |
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$ |
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Income taxes |
$ |
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$ |
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See notes to unaudited consolidated financial statements.
6
HUB GROUP, INC.
NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Interim Financial Statements
Our accompanying unaudited consolidated financial statements of Hub Group, Inc. (the “Company,” “Hub,” “we,” “us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to those rules and regulations. However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.
The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position as of March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021.
These unaudited consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.
NOTE 2. Acquisition
Choptank Transport, LLC Acquisition
On
The acquisition of Choptank enhanced our refrigerated trucking transportation solutions offering and complemented our growing fleet of refrigerated intermodal containers. Choptank has developed a proprietary technology platform that we will leverage to enhance our truck brokerage service line.
The initial accounting for the acquisition of Choptank is incomplete as we, with the support of our valuation specialist, are in the process of finalizing the fair market value calculations of the acquired net assets. Certain post-closing activities outlined in the acquisition agreement remain incomplete. As a result, the amounts recorded in the consolidated financial statements related to the Choptank acquisition are preliminary and subject to change.
The following table summarizes the preliminary allocation of the total consideration to the assets acquired and liabilities assumed as of the date of the acquisition (in thousands):
|
October 19, 2021 |
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Cash and cash equivalents |
$ |
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Accounts receivable trade |
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Prepaid expenses and other current assets |
|
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Property and equipment |
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Right of use assets - operating leases |
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Goodwill, net |
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Other intangibles |
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Total assets acquired |
$ |
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Accounts payable trade |
$ |
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Accrued payroll |
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Accrued other |
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Lease liability - operating leases short-term |
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Lease liability - operating leases long-term |
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Total liabilities assumed |
$ |
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Total consideration |
$ |
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Cash paid, net |
$ |
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7
The Choptank acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of October 19, 2021 with the remaining unallocated purchase price recorded as goodwill. The goodwill recognized in the Choptank acquisition was primarily attributable to potential expansion and future development of the acquired business.
The following table presents the carrying amount of goodwill (in thousands):
|
Total |
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|
Balance at December 31, 2021 |
$ |
|
|
Acquisition |
|
( |
) |
Balance at March 31, 2022 |
$ |
|
The changes noted as "acquisition" in the above table refer to purchase accounting adjustments related to the Choptank acquisition.
Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase will be fully tax deductible over a period of
The components of “Other intangibles” listed in the above table as of the acquisition date are preliminarily estimated as follows (in thousands):
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Accumulated |
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Balance at |
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Estimated Useful |
|||
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Amount |
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Amortization |
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March 31, 2022 |
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Life |
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Customer relationships |
$ |
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|
$ |
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$ |
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Carrier network |
$ |
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$ |
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$ |
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Developed technology |
$ |
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|
$ |
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|
$ |
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Trade name |
$ |
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|
$ |
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|
$ |
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|
The above intangible assets are amortized using the straight-line method. Amortization expense related to this acquisition for the three months ended March 31, 2022 was $
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Total |
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Remainder of 2022 |
|
$ |
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|
2023 |
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2024 |
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2025 |
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2026 |
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|
The following unaudited pro forma consolidated results of operations present the effects of Choptank as though it had been acquired as of January 1, 2021 (in thousands, except for per share amounts):
|
Three Months Ended |
|
|
|
March 31, 2021 |
|
|
Revenue |
$ |
|
|
Net income |
$ |
|
|
Earnings per share |
|
|
|
Basic |
$ |
|
|
Diluted |
$ |
|
The unaudited pro forma consolidated results for the annual periods were prepared using the acquisition method of accounting and are based on the historical financial information of Hub and Choptank. The historical financial information has been adjusted to give effect to the pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been had we completed the Choptank acquisition as of January 1, 2021.
8
NOTE 3. Earnings Per Share
The following is a reconciliation of our earnings per share (in thousands, except for per share data):
|
Three Months Ended, March 31, |
|
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|
2022 |
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